[2010]

A Report on IT and
MIS Application
[Amul .The Taste of India]

Submitted to

Prof. Avani Rachh

Submitted By: Group 8_ members

Rajiv Nandan (033)

Rati Kale (22)

Krutika(9)

Rishika Jain(19)

Mayank Nath (035)

 ICT application in a dairy industry:
The e-experience of Amul
Overview

Gujarat C o -Operative Milk Marketing F e d e r a t i o n L t d . is an Apex Co-Operative Organization.

It is respected for its credentials even after 56 years after its inception. The Co-Operative
movement started with two villages and 247 liters of milk in 1946. It has become a rupees one
billion-business now. The success of Amul explains the reasons for this remarkable growth. Following
the strategic advice from the freedom fighters like Sardar Vallabhai and Morarji Desai, the Co
-Operative movement started with the slogan “Remove middlemen” in Gujarat by the village
masses. The collective farmers succeeded in making the British government accept the concept of Co-
Operative societies. The Kaira District Co-Operative Milk Producers union Ltd., Anand was born on
Dec 14, 1946.

State Marketing Federation

All Dairies in State

District Milk Processing

Union Every District in the

Village Co-operative Society

All Villages in a District

Fig. 1: The Anand Pattern

The first lesson in milk marketing was learnt when an assured outlet for milk in Bombay
stimulated increased milk collection in the villages of Kaira District. More and more
farmers joined hands in all the villages to successfully negotiate the increased demand for the
milk. The Bombay milk scheme did not accept all the milk that is procured by the Co-
operative society. Setting up of a dairy processing unit was a way to solve the problem. There
was a need felt for the Dairy plant to process and utilize the milk supplied by the society and
as a result the dairy was setup in 1995.

The Anand pattern of Dairy Co-Operative includes the Dairy Co-Operative societies at village
level and a processing unit called “Union” at district level, as shown in Fig.1. Inspired by this
pattern, similar milk unions were started in other districts too. To market the products of the
milk unions, GCMMF was formed in 1973. GCMMF is the sole marketer for all the range
of Amul products. Originally they were only milk powder and butter. Later it is expanded
drastically to cover products such as – ice creams, pizza, ghee, cheese, chocolates, shrikhand,
and paneer and so on. These made Amul the leading food brand in India. The new structure of
GCMMF is shown in Fig.2

Fig2: The Anand Pattern - New State Marketing Federation:

All Dairies in a State GCMMF
in Gujarat
17 State Federations in India

District Dairy
Every District in the State
12 District Unions in Gujarat
180 Unions all over India

Village Cooperative Society

All Villages in a District
10,675 villages in Gujarat
80,000 villages in India

Milk Producers
All milk producers in a village
2.2 million in Gujarat
10.6 million in India

Fig 2: The new Anand Pattern - New

Two leading figures of the Indian dairy industry – Tribhuvandas Patel and Dr. V. Kurein
made Co-Operative movement to succeed. The only reason for the success of GCMMF as Dr.
V. Kurein stated: “Determination, Dedication, Discipline are forming the driving forces of the
Amul” The GCMMF consists of 12 affiliated member Dairies / District milk unions and it
has its own manufacturing unit called Mother Dairy at Gandhinagar with the largest network
in food industry supported by marketing and distribution of liquid milk and a variety of
products under the brands – Amul and Sagar. It is also the sole selling agent for the
National Dairy Development Board’s (NDDB) edible oil – ‘DHARA’. GCMMF also
coordinates with the manufacturing dairy units for production planning and milk procurement
and handles the distribution of milk from surplus union to the deficit areas.

According to Mr. B M Vyas, Managing Director GCMMF, “We’re in between the two
extremes – the customer and the farmer. Both expect the maximum intake. In one way, the
customer wants to have the best product available at the lower price. On the other, farmer
expects the maximum amount for his milk. To sustain in the business we have to make
sure that we give them what they want”. As all these require a tight integration in the
supply and value chain activities, GCMMF is able to excel it by educating the farmer and
providing him the necessary guidance on one end and on the other end approaching the
consumer with the best product and understanding the Indian consumer better. The
information technology and total quality management came together to help the GCMMF to
gain control on the procurement, processing and distribution functions.

VISION
MISSION
STRATEGY

Improvement
TWE

Continuous
TEI
Continuous TQC
TEI TQC
Improvement

HR
HR

Fig 3: The TQM Model - GCMMF

“Information Technology is our thrust area from our inception that is because we are marketing
the perishable goods. There is every chance that we may collapse in between if we don’t
understand the market realities and the village farmers. There should be a 24x7 hrs
information flow in between us and the remaining nodes of our supply chain”, according to
Mr. Rathod, Divisional Manager.

The need for coordinating a highly distributed system was clearly understood. Close
coordination has been the main feature of the value chain, shown in Fig.4. They were well
prepared for the systems revolution. GCMMF is one amongst the first few Indian companies
to start a web site and opting for the Domain “.coop” will prove the fact that they are well
ahead of the time. The IT related initiatives that GCMMF undertook include – an ERP
initiative to integrate the market related activities. WEB initiatives made the consumer w e l l
aware of Amul. ‘Online Stores’ and ‘Portal activities’ like emailing, greetings gave the
consumer a better picture of Amul. AMCUS, the Automatic Milk Collection Unit Systems are
empowering the farmers by employing IT at village co-operative societies. IT increases the
transparency levels in the system and builds the trust among the farmers. Making the system
automatic could remove the man in the loop. The use of IT platforms reduces the potential for
discretionary decisions.

GCMMF, being a pioneer in the dairy industry become the industry standard. The Total
Quality M a n a g e m e n t a n d Information T e c h n o l o g y i n i t i a t i v e s ensured t h e
maximum shelves in the retail stores as well as in customer minds.
GCMMFL is in a state where it is growing rapidly and it is one amongst the most
respected Indian companies in 2003. It is because of the values and systems that are in
place. As a Chinese proverb says, “As long as the trunk is firm, worry not about the
branches swinging to the wind.” GCMMFL is trying to strengthen its rural base – The
Village Cooperatives – to ensure the lead in the dairy business. The number of village
societies in Gujarat is shown in Fig 5:
Number of Village Societies Total: 10852

Number of Village Societies

1800

1600

1400

1200

1000

800

600

400

200

Unions

Fig 5: Number of village societies in Gujarat

Overview of the ICT Platform

Milk production is important to India, as milk is one of the main sources of proteins
and calcium for a largely vegetarian population. Dairying provides a livelihood for
millions of Indian farmers and additional income for a large number of rural families
as well as means for women to participate in the economic activity in rural areas.
India became the largest producer of milk in 1999 primarily due to the efforts of the
co-operative movement initiated by the National Dairy Development Board (NDDB).
 The following Fig 6 represents the milk production in India.

100
80
60
40
20
0 70.8

1950 1960 1968 1973 1980 1990 1995 1996 1997 2000 2001

Million Metric Tonnes (MMT)

Fig 6: Indian Dairy Industry – Milk production in India

The dairy sector already uses computers in 4000 rural locations for processing milk
buying/selling transactions in a transparent manner and exposes 500,000 people daily to
the benefits of IT. The project has been developed thr ough extensive collaboration with the
co-operative dairy unions of Gujarat.

The Co-Operative Society: Operations

The village milk co-operative is a society of primary producers formed under the guidance
of a supervisor or milk supply officer of the Co-operative Dairy Union (District level Co-
operative owning the processing plant). A milk producer becomes a member by buying a share
from the co-operative after agreeing to sell milk only to it. Members elect a managing
committee headed by a chairperson responsible for staff in charge of day-to-day operations.
Each society has a milk collection center where farmers take their milk in the morning and
evening. There are 1million farmers organized into village milk producer’s co-
operative societies and procurement of milk is 13 million liters per day. The daily collection
of milk is shown in Fig 7
 Milk Collection Total in 2001-02: 1674.818 Daily Avg: 4.587 (Million ltrs)

450

400

350

300

250

200

150

100

50

Union

M i lk Mil lion L trs

Fig 7: Daily collection of Milk

The GCMMF – Amul has taken the initiative of installing the AMCUS – Automatic Milk
Collection Unit Systems at village societies to enhance the transparency of
transaction between the farmer and the Co-Operative Society. These systems not only
ensured the transparency but also gave Co-Operative societies a unique advantage by
reducing the processing time to 10 percent of what it used to be prior to this. GCMMF
indeed got the entire supplier information through the systems integration. The information
related to members, fat content, volume of the milk procured and the amount payable to the
member are accessible to the Co-Operative Society in the form of a database. There are 10755
village co-operatives in Gujarat that are now able to collect 6.1 million liters of milk from 2
million members. Thanks to the use of IT, both transparency and trust have been
enhanced. The total producer members clustered by the village societies are shown in Fig 8.
 Number of Producer Members

600000

500000

400000

300000

200000

100000

Union

Producer Members

Fig 8: Number of Producer Members Total: 2,223,796

The success of AMCUS prompted the GCMMF to aggressively go on using Information

Technology to capture the end-to-end data. GCMMF planned to cover all aspects of the
value chain. These plans supports integration of the value chain activities destined
towards the “Better Management Practices”. These e f f o r t s o f GCMMF triggered the
changes in the Villages; farmers kept themselves open for the changes. One of the Co-
Operative unions “Banas dairy” started with educating the rural about the cattle, cleanliness
and so on because of the systems that are already in place at AMCUS. The Dairy
Information and Services Kiosk (DISK) is another initiative that is started with the help of
IIM (A) by GCMMFL. There are many more in the pipeline of GCMMFL IT Initiatives.
Various things like Enterprise wide Integrated Application Systems (EIAS) to integrate
the Distribution side of the Supply chain, DISK – to upgrade the application at the Milk
Collection Centers and to connect them to the Internet to access a specialized dairy
portal with content delivered in the local language have already started giving the
fruits to the rural poor, which has persuaded the rural folks to actively participate in IT
Revolution of the dairy industry.

Things are ‘changed’

The time that is being taken to collect the milk in a society ranges from 5 to 6 hrs
averaging at about 5 minutes per member after installing AMCUS. There is a
comparative reduction of more than 75% of time that’s spent on each deal. Each farmer
is getting paid for his milk deposited in society’s counter in another counter immediately
 on a real time basis. Now villagers were able to send their emails from AMCUS to
anywhere in the world and DISK is expected to arrive at the village cooperatives this
year enabling the villagers to learn from the net and connecting with enterprise systems of
GCMMF [2].

The DISK project conceptualized by IIM–A will have the interconnectivity to a dairy
portal at a district levels, that serves the information for village cooperative society
members. The application software provide to cooperatives will include:

 Data analysis and decision support to help rural milk collection society in
improving its performance.
 Data analysis to improve productivity the yield from cattle.
 Farmers with facilities to place orders for goods and service offered by different
agencies in the dairying sector and collaborates on subjects of interest.

The services to be offered at this center are:

 Information service related to dairying

 Access to multimedia database on innovations captured by SRISHTI (NGO
working IIMA) from all the villages over Gujarat.
 Communication facilities such as e-mail, fax, net phone
 Banking centers for payment for the farmers by using the milk cards which are
already in place
 The e-governance and e-procurement
 Effective medium of communication to the Gujarat rural

The basic requirements of DISK are already met by the village cooperatives. There might
be an upgrade required for the software and hardware in place and an Internet
connection would be required. For the portal at the unions, a small server and a leased line
would be needed. The union portal can be implemented at a central location at one of the
NDDB servers. Projects such as decision support systems and data mining packages are in
pipeline of GCMMF action plan.

Project Goals

Success of any project is decided by the objectives and vision it has envisaged at the inception
phase. The rural IT empowerment project started by GCMMF had the following objectives:

 To build transparency among the farmers towards cooperative society

  training the rural people towards the quality supply of milk
 getting the whole activity chain of GCMMF under uninterrupted
information flow network
 To reduce the pilferage
 to remove the complexity associated with the village cooperative society milk
collection process
 empowering the rural masses towards self-development activities
 To build the competencies in the area of it
 To build the transparency and trust amongst the rural people towards the
cooperative system
 To face the global competition by effective decision-making.

Technical Performance

The application of Information Communication Technology systems (ICT) for milk

collection has been working without any major flaw in 2500 collection centers. The use of
ICT helped both GCMMFL and the farmers. In the case of farmers it reduced the delay in
getting the money. Rather, it made the operation real time oriented. This improved the
cash availability thereby reduced the need for taking loans. Whereas, GCMMFL also
benefited. The operations were simplified. The possibilities of errors in estimations were
done away with. The farmers were also happy with the operation of the system. The best
aspect of the system is the elimination of the waiting system.

Training and Skill set development

Training and skill development are elements that can make an activity sustainable. The
Service companies that are providing the AMCUS services to the village cooperatives
are providing the training for the users of the system. The users are well aware of the
reports to be produced and tasks to be accomplished. The users of the system are now able
to prepare the Balance sheet and Profit and Loss accounts through the system i.e.
provided by the service companies. The GCMMF in fact created an environment
conductive to technology diffusion. GCMMF encouraged five to six companies to develop
the software for the milk chilling centers. GCMMF used computerized milk procurement
system as a platform to bring together a number of interest groups. The platform acted a
knowledge integrator and also a platform to sharing knowledge. All the service
companies are staying competitive in order to sustain with the business. The villagers
are also taking measures to select the systems. The software facilitates networking, financial
 reporting and Internet connectivity. These software packages are classified as DOS based
and Windows based, according to the platform that the village cooperative select as its
operating system for the personal computers. There are around 4000 PC based systems
operating in the village cooperatives. Entrepreneurial development and generating the
quality employment are two spillover benefits of ICT platform.

All the village cooperatives are involving two to three operators who are extensively trained
by the service provider companies. Basically the educated unemployed youth are getting
new opportunities through this platform. The secretary of the village cooperative is
empowered by the villagers to take the necessary action for the improvement of the
societies.

The benefits of the AMCUS system

The rural people are getting benefited much by the IT initiatives, started by GCMMF. The
benefits of various projects such as DISK are yet to be realized. The following are the
demonstrated benefits of the ICT platform.

 time reduction of pilferage reduced human errors

 on the spot payments for farmers wastage is reduced
 transparency of operation operational integration

The successful utilization of IT to bridge the Digital divide has aptly been described by Dr.
M. V. Kurein, Chairman, GCMMF, “Computers were not created for poverty reduction
hence it is futile to except that the world will be a better place if we all had access to
computers and internet but information is power and its stands to reason that if this power
is shared equitably all will benefit”. The scale of operations of Amul is very large and
complex because of the huge supplier base the Gujarat Village co- operative society
members. Amul makes about 10 million payments daily amounting to transactions worth
Rs.170 million in cash. More than 500 trucks move the milk from villages to 200 dairy
processing plants twice a day. The IT initiatives of Amul started in 1994 IT became the
major thrust area of GCMMF as it can facilitate improvements in operational efficiency.
Since then GCMMF is marching in a big way starting from AMCUS to today’s DISK.

Evolution of IT at Amul

The implementations of ITC systems in Amul took place under the Dynamic
leadership of Dr. B M Vyas. He made sure that the problems are eliminated, while
implementing. Frequent review helped. The encouragement by Dr. Kurien kept all of them
highly motivated.

 The milk collection c e n t e r s a t villages c o -operative societies, w e r e first

automated
 The enterprise wide integration was taken up next.
 Application and utilization of GIS
 Data analysis software utilization for milk production estimation and increasing
productivity.
 VSAT network between all the levels of distribution network and GCMMF.
 WEB initiatives-“.coop” domain name, to become the first five Indian
companies that went for web and cyber stores.

The evolutionary path is summarized in Fig 19.

Web integration
DISK
EIAS
Internet and Web
Related

AMCUS

1996 1997 1998 1999 2000 2001 2002

 Fig 19: The IT Initiatives of GCMMFL

Enterprise Wide Systems: EIAS and GIS

The main benefit of ICT has the power of integration and amenability to centralized monitoring.
All the units are networked. GCMMF has connected its Zonal Offices, Guwahati Regional
Office as well as Member Dairies, Milk Unions and its own Unit- Mother Dairy through VSAT
for seamless exchange of “Online” information. All Sales Offices, C&F points & Wholesale
distributors of GCMMF have been connected through TCP/IP Internet Mail Account for exchange
of information.

In addition to the above, GCMMF is using Geographical Information System (GIS) at its Head
Office and key Marketing Offices. Using the All India Map in GIS, they are in position to plot
zone/depot boundary as well as pointer for zone, depot & distributor locations, which are
superimposed by product-wise sales data. The same is being used for sales & distribution
planning and review. Moreover, GIS is being used for business planning activity at milk centers
and it covers animal census data. This has helped them to know average milk production and
productivity of cows and buffaloes in Gujarat and track the animals and trend analysis etc. The
EIAS customized ERP packages of GCMMF is designed in such a way that is can be plugged
into various points of supply chain, as shown in Fig 20.

etail B2B
R
B2C
Portal
Whole Sale Depots, Retailers, Direct consumer Base

Depots Depots

EIAS
SCM GIS Zones Zones
Internet
HO

ERP
DISK Member Supplier Transport
 Structure of the Information Systems

Moreover, the EIAS Software is platform independent and it can work on any Operating
System (OS) including Linux. Using the shareware software platforms systematically, the
IT cost was controlled to a great extent. GCMMF is also in the process of web enabling
the selected process of EIAS so as to capture the key information at source and use the
same througho ut the enterprise of on-line view & decision making, which includes
Transporters, Members manufacturing units, Oil packing stations, suppliers, depots and
C&Fs, Field force etc. This will optimize further the Logistic Supply chain activities of
GCMMF to a great extent. Moreover, GCMMF is one among the first Indian corporate on the
Web since 1996 and we have put Amul Cyber store as a first step towards e-commerce activity
in India. This has helped us to interact directly with the consumers and delighting them with
our values added services. GCMMF has linked under www.amul.com as a part of our Amul
b2b initiative. Today Amul’s Cyber Store offers its services in more than 120 cities. In
order to attract more customers, GCMMF launched amulgreetings.com and amulkids.com to
extend the brand identity to kids and teenagers who are increasing its target market for its ice
creams and chocolates. By attempting to identify itself with every segment, GCMMF ensure
that the brand was on top-of-the-mind of customers. The recipe section in amul.com site
has also helping GCMMF to strengthen their position as ‘The Taste of India’. By
allowing the customers to directly interact and give their feedback using product
names, which will be answered by the respective product manager will make customer
happy.

Local participation: Systems and Actual Achievement

Without the local support GCMMF may not achieve the kind of results, which it is
achieving today. The cooperative movement in India especially at Gujarat gave birth to the
village cooperatives. These village cooperatives started operating before the freedom has
come to India. Even today the commitment level of the villagers doesn’t seem to be tainted.
GCMMFL is trying to increase the confidence levels of the farmers on the cooperative
setting. The philosophy of GCMMFL – We’re working for the farmers – is embibed in every
employee of it. For years the GCMMF philosophy remained same where as the approach kept
on changing according to times.

The major portion of the villagers those who deposit milk in cooperatives are illiterates.
Making them feeling the need for systems is quite a difficult task and making them to
manage the systems for the operations of milk chilling centers is much more difficult.
GCMMF m a de it possible b y incubating t h e Total Quality approach to the village
cooperatives. It kept alive the desire to excel feelings of farmers. GCMMF is now able to
manage the highest supply of milk in optimized way. The maintenance of the supplier and
distributor network is crucial especially in the case when the company has a perishable
product in its portfolio. With t h e involvement of high-speed networks in place GCMMF
is capitalizing on this. But all without the support of the beneficiary here in case the
farmer of Gujarat; it is impossible for any organization to climb up in the market.
GCMMF mentors the farmers towards effective output delivery. The farmer follows the
guidelines provided by GCMMF and gives them the quality supply. Finally GCMMF is able
to manage this all kinds of complex tasks because of systems in place and more than that
the people participation. Instances show us the empowerment levels of member unions of
GCMMF. The Banas dairy – Palampur is situated in north Gujarat, which is an
underdeveloped region of Gujarat. Many parts of the district are yet to be covered by the
communication media. Unfortunately no one had taken initiatives to build right
communication infrastructure as on date. Under this scenario, Banas dairy implemented a
project in the rural area called “Chiraag Banas Internet Sewa” in local language – Gujarati.
This project of Banas dairy provides the Internet access to the rural in their language by
using wireless technologies. They propose to provide services like E-Mail, Job works,
Entertainment, Off-Line education and basic computer education for the village
children. This education is related to animal husbandry, watershed management, health &
Sanitation, medical assistance and information related to various government schemes
and procedures. These very efforts will make this AMCUS centers a communication point
to the external world. There are already some tie-ups made with the government authorities
f or the government procedures. This reduces the time spent at the government offices
drastically; moreover it attracts the village crowd to take part in cooperative activities.
The implementation is also trying top rope in some private sector companies to provide
the farmer reliable information.

Critical Success Factors: Management Practices and Learning at GCMMFL

GCMMFL’s management practices and the strong commitment of Gujarat farmers to the
GCMMFL are two basic reasons of GCMMFL’s success in implementing IT.

Though initially Amul has faced certain basic problems such as user acceptance, with strong
commitment towards change, GCMMF was able to overcome all of the problems and
successfully marched into new era.

Here are the reasons for Amul’s success. Various reasons account for this scenario. Some of
them are very critical for the success of this model in Gujarat and the IT Initiatives
implemented by GCMMF:

 the Strong and Committed Gujarat Farmer towards cooperative movement the Total
Quality Management initiatives of GCMMFL
 the strong work culture of GCMMFL dynamic leadership and die-hard followers local
administration
 extensive training
 user – friendly hardware and software technology and
 the effective communication channels employed by Gujarat Cooperative Milk Marketing
Federation Ltd to educate the farmer

The ever ‘raring to go’ attitude of GCMMFL made it to pass on the benefits that it secured
over a time, down the line to the milk producer with specific cautions and mentoring. The
milk societies capitalized on this and achieved the great results such as ISO certifications.

Conclusion

The Amul’s IT operations are based on the principles of collaboration, co-operation and co-
evolution as opposed to the conflict, conformation and competition approach followed by
brand marketers. Amul remained a s the trendsetter i n the whole operations. Even though
Automated Milk Collection Centers and Dairy Information System Kiosk projects are part
of streamlining its supply chain, Amul’s projects delivered a lot of benefits to the rural
community. Unlike the others in the industry Amul facilitated the rural mass for in
becoming an empowered community. Agricultural Universities and Government Agencies
are also getting into the projects of GCMMFL. Amul itself has seen increased revenues. It
also experienced effective control over the operations through the Information Technology
Projects.

The experience of conceptualizing and implementing an ICT platform for a d a i r y

industry is a challenging task. It is distributed data architecture. The critical factors that
contributed to the success of this project are worth look into:

 Understanding the baseline operations comprehensively is the starting point for

designing a customer oriented ICT platform. The understanding of ground conditions
helped Amul to design the system considering customer needs [3].
 Here again, the implementation was carried out in a limited way and the system
was expanded after validation. The reputation of the agency was a major factor that
 increased the acceptance of the new technology.
 The new system endowed substantial benefits to the customer. The waiting time for
payment was completely eliminated. In any ICT platform if the benefits far out
weigh the costs, the rate of diffusion will be high.
 Working closely with the supplier, helped in t h e hardware/software
customization, thereby facilitating the user acceptance. This also led to user led
innovation through a pilot exercise before the actual implementation.
 Amul had been known for treating all its customers alike. This helped them to create
trust. Existing levels of trust helped them to reinforce the working relationships.

The training and development programmes organized by GCMMF at village societies helped
all members in acquiring sufficient knowledge about the new system. The personal interest
and commitment of the executives eliminated the teething problems and gave the users access
to the new technology.

References

1. http://www.amul.com/index1.html

2. P. Chandra Sekhara, Private Extension: Indian Experience, Pro-Farmer Private

extensions, Manage, Chapter 1, pp 1-31, 2002

3. S. Khan, ICT as an instrument to leverage: The millennium development goals,

UN ICT Task Force, pp 10-14, 2002

4. Trends in the ICT market, industry sector analysis, International Trade

Administration U.S. Department of State, 2002.